Student Loan Consolidation: How to Discharge Student Loans

Discharging Student Loan Debts through Bankruptcy

Typically, you cannot discharge a student loan in a Chapter 7 bankruptcy proceeding. However, in some instances, if you are even having a difficult time paying off a student loan consolidation, your primary reason for discharging your student loan debt would be because of hardship. Legally, the debt can be forgiven if:

–The borrower is unable to sustain a lifestyle that meets the minimum requirements needed to pay for food and shelter for his family and himself. If circumstances are such that it looks like his standard of living is not likely to change for a long time and he has demonstrated a continued effort to pay down the loan amount, then the court will usually find in the his favor.

Protecting yourself from Collectors

If you can prove that you are suffering from hardship to the extent that trying to pay off the loan is next to impossible, then the court will erase the amount you owe. What’s more, filing for bankruptcy immediately and temporarily safeguards you from the actions of collectors until your case has been settled.

Steps to Take to Discharge a Student Loan Consolidation or Student Loan Debt: The Paperwork Needed at a Bankruptcy Proceeding

If you do go ahead and discharge a student loan, then you will need to supply the agency that is servicing your loan with three key documents, namely: a listing of your creditors, a document that is referred to as a “notice of first meeting of creditors”, and an order of final discharge. In addition, you need to file further documentation that is called an adversary proceeding so the bankruptcy judge can decide whether or not your situation is a hardship case, or you are experiencing circumstances where discharging you student loan debt is the best action to take.

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